SAN FRANCISCO--(BUSINESS WIRE)--Feb. 7, 2018--
Yelp Inc. (NYSE: YELP), the company that connects people with great
local businesses, today announced financial results for the fourth
quarter and full year ended December 31, 2017.

“We finished 2017 strong with rising growth in new advertiser
acquisition and continued improvements in revenue retention from the
prior year,” said Jeremy Stoppelman, Yelp’s co-founder and chief
executive officer. “In 2018, we are focused on increasing consumer usage
through deepening our product experience in the Restaurants category and
attracting advertisers through expanding sales channels and increased ad
product flexibility.”

The following results reflect Yelp’s financial performance and key
operating metrics for the three months and year ended December 31, 2017
as compared to the same periods in 2016.

Fourth Quarter 2017 Financial Highlights

Net revenue was $218.2 million, representing 12% growth over the
fourth quarter of 2016. Excluding revenue from Nowait and Turnstyle
Analytics (now called Yelp WiFi), which we acquired in 2017, and
Eat24, which we sold to Grubhub Inc. concurrently with the
commencement of our long-term partnership on October 10, 2017, net
revenue grew 20% over the fourth quarter of 2016.

GAAP net income was $142.1 million, or $1.60 per diluted share,
compared to GAAP net income of $8.3 million, or $0.10 per diluted
share, in the fourth quarter of 2016.

GAAP results include a $164.8 million pre-tax gain on the sale of
Eat24.

Adjusted EBITDA was $41.6 million compared to $45.3 million in the
fourth quarter of 2016.

Transactions revenue totaled $5.2 million, compared to $16.6 million
in the fourth quarter of 2016. Transactions revenue decreased
year-over-year due to the sale of Eat24, which had previously
generated a significant portion of our Transactions revenue. Eat24
generated $1.8 million of our Transactions revenue in the fourth
quarter of 2017 prior to the completion of its sale on October 10th.
For additional details on the impact of the sale of Eat24 and other
corporate development activities in 2017, see the supplemental table
in the section titled “Revenue Impact of
Corporate Development Activities in 2017” at the end of this
release.

Other services revenue totaled $4.6 million, compared to $1.7 million
in the fourth quarter of 2016, primarily due to revenue from Nowait
and Yelp WiFi.

Fourth Quarter 2017 Key Business Metrics Highlights

Cumulative reviews grew 23% year over year to approximately 148
million.

App unique devices grew 20% year over year to approximately 29 million
on a monthly average basis1.

Paying advertising accounts grew 21% year over year to approximately
163,0002.

Transactions revenue totaled $60.3 million, compared to $62.5 million
in 2016. Eat24 generated $53.9 million of our Transactions revenue in
2017 prior to the completion of its sale on October 10th.

Other services revenue totaled $14.9 million, compared to $5.3 million
in 2016, primarily due to revenue from Nowait and Yelp WiFi.

“We increased operating income in 2017, while achieving strong topline
results aided by customer success initiatives,” said Lanny Baker, Yelp’s
chief financial officer. “Looking to 2018, we plan to provide businesses
greater control over their advertising messages and increased
flexibility in contract term lengths. We are also focused on
strengthening our competitive position in the highly-trafficked
Restaurants category, and as a result, expect to incur operating losses
of $20-$25 million related to Nowait, Yelp Reservations and Yelp WiFi
collectively in 2018 as we invest in their growth.”

First Quarter and Full Year 2018 Business Outlook

As of today, Yelp is providing its outlook for the first quarter and the
full year of 2018. Please note that the outlook reflects the sale of
Eat24, which was completed on October 10, 2017:

$ and shares in millions

First Quarter 2018

Full Year 2018

Net Revenue*

$218 - $221

$935 – $965

Adjusted EBITDA

$29 – $32

$175 – $187

Stock-Based Compensation

$26 – $27

$112 – $116

Depreciation and Amortization as % of Net Revenue

~5%

~5%

Fully Diluted Share Count

90 – 91

91 – 93

* Net revenue outlook reflects Yelp’s adoption of Accounting Standards
Update No. 2014-09, Revenue from Contracts with Customers (“Topic 606”),
as of January 1, 2018. Please note, however, that the expected
percentage increases provided during the conference call compare such
net revenue outlook with Yelp’s reported net revenue for the first
quarter and full year 2017 as determined under the previously applicable
revenue recognition guidance. We do not expect the percentages to be
materially different than when calculated with respect to first quarter
and full year 2017 net revenue as determined pursuant to Topic 606.

Yelp has not reconciled its adjusted EBITDA outlook to GAAP net income
(loss) because it does not provide an outlook for GAAP net income (loss)
due to the uncertainty and potential variability of other income, net
and provision for (benefit from) income taxes, which are reconciling
items between adjusted EBITDA and GAAP net income (loss). Because such
items cannot be reasonably predicted and could have a significant impact
on the calculation of GAAP net income (loss), a reconciliation of the
non-GAAP financial measure outlook to the corresponding GAAP measure is
not available without unreasonable effort. For more information
regarding the non-GAAP financial measures discussed in this release,
please see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to
Non-GAAP Financial Measures” below.

Quarterly Conference Call

Yelp will host a conference call and live webcast today at 1:30 p.m. PT
to discuss the fourth quarter and full year 2017 financial results. To
access the call, please dial 1 (844) 795-4421, or outside the U.S. 1
(661) 378-9638, with Passcode 6997287, at least five minutes prior to
the 1:30 p.m. PT start time. The webcast can be accessed on the Yelp
Investor Relations website at yelp-ir.com.
A replay of the webcast will be available at the same website until
February 15, 2018.

About Yelp

Yelp Inc. (http://www.yelp.com)
connects people with great local businesses. Yelp was founded in San
Francisco in July 2004. Since then, Yelp has taken root in major metros
in more than 30 countries. Approximately 29 million unique devices1
accessed Yelp via the Yelp app, approximately 77 million unique visitors
visited Yelp via desktop computer3 and approximately 64
million unique visitors visited Yelp via mobile website4 on a
monthly average basis during the fourth quarter of 2017. By the end of
the same quarter, Yelpers had written approximately 148 million rich,
local reviews, making Yelp the leading local guide for real
word-of-mouth on everything from boutiques and mechanics to restaurants
and dentists.

1 Calculated as the number of unique devices accessing the
app on a monthly average basis over a given three-month period,
according to internal Yelp logs.

2 Paying advertising accounts comprise all business accounts
from which we recognize advertising revenue in a given three-month
period.

3 Calculated as the number of “users,” as measured by Google
Analytics, accessing Yelp via the desktop website on a monthly average
basis over a given three-month period. Adjusted to remove certain robot
traffic, as described in Yelp’s most recent Annual Report on Form 10-K
or Quarterly Report on Form 10-Q.

4 Calculated as the number of “users,” as measured by Google
Analytics, accessing Yelp via the mobile website on a monthly average
basis over a given three-month period.

Non-GAAP Financial Measures

This press release includes, and statements made during the above
referenced conference call will include, information relating to
adjusted EBITDA, EBITDA, non-GAAP net income, adjusted EBITDA margin and
non-GAAP net income per share, each of which the Securities and Exchange
Commission has defined as a "non-GAAP financial measure." We define
adjusted EBITDA as net income (loss), adjusted to exclude: provision for
(benefit from) income taxes; other income, net; depreciation and
amortization; stock-based compensation expense; any gain (loss) on the
disposal of a business unit; and restructuring and integration costs. We
define EBITDA as net income (loss), adjusted to exclude: provision for
(benefit from) income taxes; other income, net; depreciation and
amortization; and restructuring and integration costs. We define
non-GAAP net income as net income (loss), adjusted to exclude:
stock-based compensation expense; amortization of intangibles; any gain
(loss) on the disposal of a business unit; restructuring and integration
costs; and the tax effect of stock-based compensation, amortization of
intangibles, restructuring and integration costs and valuation
allowance. We define adjusted EBITDA margin as adjusted EBITDA divided
by net revenue. Adjusted EBITDA, EBITDA, non-GAAP net income, adjusted
EBITDA margin and non-GAAP net income per share have been included in
this press release, or will be included in the conference call, because
they are key measures used by Yelp management and the board of directors
to understand and evaluate core operating performance and trends, to
prepare and approve its annual budget and to develop short- and
long-term operational plans. The presentation of this financial
information, which is not prepared under any comprehensive set of
accounting rules or principles, is not intended to be considered in
isolation or as a substitute for the financial information prepared and
presented in accordance with generally accepted accounting principles in
the United States (“GAAP”).

Adjusted EBITDA, EBITDA and non-GAAP net income have limitations as
analytical tools, and you should not consider them in isolation or as
substitutes for analysis of Yelp’s financial results as reported under
GAAP. Some of these limitations are:

although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized may have to be replaced in the
future, and adjusted EBITDA, EBITDA and non-GAAP net income do not
reflect cash capital expenditure requirements for such replacements or
for new capital expenditure requirements;

adjusted EBITDA and non-GAAP net income do not consider the
potentially dilutive impact of equity-based compensation;

adjusted EBITDA and EBITDA do not reflect tax payments that may
represent a reduction in cash available to Yelp;

adjusted EBITDA, EBITDA and non-GAAP net income do not take into
account any restructuring and integration costs; and

other companies, including those in Yelp’s industry, may calculate
adjusted EBITDA, EBITDA and non-GAAP net income differently, which
reduces their usefulness as comparative measures.

Because of these limitations, you should consider adjusted EBITDA,
EBITDA, non-GAAP net income, non-GAAP net income per share, and adjusted
EBITDA margin alongside other financial performance measures, including
various cash flow metrics, net income (loss) and Yelp’s other GAAP
results. Additionally, Yelp has not reconciled its adjusted EBITDA
outlook for the first quarter and full year 2018 to net income (loss)
because it does not provide an outlook for net income (loss) due to the
uncertainty and potential variability of other income, net and provision
for (benefit from) income taxes, which are reconciling items between net
income (loss) and adjusted EBITDA. As items that impact net income
(loss) are out of Yelp’s control and cannot be reasonably predicted,
Yelp is unable to provide such an outlook. Accordingly, reconciliation
of adjusted EBITDA outlook to net income (loss) for the first quarter
and full year 2018 is not available without unreasonable effort. For a
reconciliation of historical non-GAAP financial measures to the nearest
comparable GAAP measures, see the non-GAAP reconciliations included
below in this press release.

Forward-Looking Statements

This press release contains, and statements made during the above
referenced conference call will contain, forward-looking statements
relating to, among other things, the future performance of Yelp and its
consolidated subsidiaries that are based on Yelp’s current expectations,
forecasts and assumptions and involve risks and uncertainties. These
statements include, but are not limited to: statements regarding
expected financial results for the first quarter and full year 2018;
Yelp’s investment and other priorities for 2018 and beyond, including
its ability to increase consumer usage through deepening its product
experience in the Restaurants category and attract advertisers through
expanding sales channels and increasing ad product flexibility, and its
ability to execute against those priorities; trends in advertiser and
revenue retention; the strategic partnership with Grubhub, including
Yelp’s ability to capitalize on the partnership, the expected timing of
the partnership integration, the expected benefits of the partnership
and the potential impact of the long-term partnership with Grubhub on
Yelp’s business and financial results; Yelp’s ability to improve its
earnings, margins, profitability and productivity; Yelp’s ability to
capture a meaningful share of the large local market; the future growth
in Yelp revenue, including the breakdown of such growth between Yelp’s
sales channels and business categories, and advertiser accounts; Yelp’s
ability to increase usage of, awareness of and engagement on Yelp among
consumers, and deliver value to consumers and local businesses; Yelp’s
ability to increase transactions completed on its platform, including
the continued development, growth and advertiser acceptance of
Request-A-Quote; trends in the appeal of Yelp’s product offerings;
Yelp’s ability to build a comprehensive offering in the Restaurant
category, including the continued expansion of Yelp Reservations, Yelp
Nowait and Yelp WiFi; and Yelp’s plans to manage dilution, including the
implementation of the authorized stock repurchase program and purchase
of shares thereunder. Yelp’s actual results could differ materially from
those predicted or implied and reported results should not be considered
as an indication of future performance. Factors that could cause or
contribute to such differences include, but are not limited to: Yelp’s
limited operating history in an evolving industry; Yelp’s ability to
generate sufficient revenue to maintain profitability, particularly in
light of its significant ongoing sales and marketing expenses, its
planned investments in Yelp Reservations, Yelp Nowait and Yelp WiFi, and
the sale of Eat24; the risk that the Grubhub partnership integration may
not be completed in a timely manner or at all, which may adversely
affect the Company's business relationships, operating results and
business generally; Yelp’s ability to successfully manage the
acquisition and integration of new businesses, solutions or
technologies, as well as to monetize the acquired products, solutions or
technologies; Yelp’s reliance on traffic to its website from search
engines like Google and Bing; Yelp’s ability to generate and maintain
sufficient high quality content from its users; maintaining a strong
brand and managing negative publicity that may arise; maintaining and
expanding Yelp’s base of advertisers, particularly as an increasing
portion of advertisers have the ability to cancel their ad campaigns at
any time; changes in political, business and economic conditions,
including any economic downturn or crisis and any conditions that affect
ecommerce growth; Yelp’s ability to deal with the increasingly
competitive local search environment; Yelp’s need and ability to manage
other regulatory, tax and litigation risks as applicable laws become
more restrictive; the competitive and regulatory environment while Yelp
continues to introduce new products and as new laws and regulations
related to Internet companies come into effect; Yelp’s ability to timely
upgrade and develop its systems, infrastructure and customer service
capabilities; and Yelp’s ability to purchase shares under the stock
repurchase purchase program, or the modification, suspension or
termination of that program. The forward-looking statements in this
release do not include the potential impact of any acquisitions or
divestitures that may be announced and/or completed after the date
hereof.

More information about factors that could affect Yelp’s operating
results is included under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in Yelp’s most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q at http://www.yelp-ir.com
or the SEC’s website at www.sec.gov.
Undue reliance should not be placed on the forward-looking statements in
this release, which are based on information available to Yelp on the
date hereof. Yelp assumes no obligation to update such statements.

Yelp Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

December 31,

December 31,

2017

2016

Assets

Current assets:

Cash and cash equivalents

$

547,850

$

272,201

Short-term marketable securities

273,366

207,332

Accounts receivable, net

76,173

68,725

Prepaid expenses and other current assets

15,700

12,921

Total current assets

913,089

561,179

Long-term marketable securities

25,032

-

Property, equipment and software, net

103,651

92,440

Goodwill

107,954

170,667

Intangibles, net

16,893

32,611

Restricted cash

18,554

17,317

Other non-current assets

31,339

10,992

Total assets

$

1,216,512

$

885,206

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable- trade

$

4,568

$

2,003

Accounts payable- merchant share

4,465

18,352

Accrued liabilities

73,665

36,730

Deferred revenue

3,469

3,314

Total current liabilities

86,167

60,399

Long-term liabilities

30,737

17,621

Total liabilities

116,904

78,020

Stockholders' equity

Common stock

-

-

Additional paid-in capital

1,038,017

892,983

Treasury stock

(46

)

-

Accumulated other comprehensive loss

(8,444

)

(15,576

)

Retained earnings (accumulated deficit)

70,081

(70,221

)

Total stockholders' equity

1,099,608

807,186

Total liabilities and stockholders' equity

$

1,216,512

$

885,206

Yelp Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

2017

2016

2017

2016

Net revenue

$

218,246

$

194,796

$

846,813

$

713,069

Costs and expenses:

Cost of revenue (1)

16,236

15,604

70,518

60,363

Sales and marketing (1)

111,084

93,550

438,643

382,854

Product development (1)

47,994

36,860

175,787

138,549

General and administrative (1)

26,703

27,372

105,673

97,481

Depreciation and amortization

9,729

9,434

41,198

35,346

Restructuring and integration

1

3,455

288

3,455

Gain on disposal of a business unit

(164,779

)

-

(164,779

)

-

Total costs and expenses

46,968

186,275

667,328

718,048

Income (loss) from operations

171,278

8,521

179,485

(4,979

)

Other income, net

1,897

742

4,864

1,694

Income (loss) before income taxes

173,175

9,263

184,349

(3,285

)

Provision for income taxes

(31,074

)

(1,000

)

(31,491

)

(1,385

)

Net income (loss) attributable to common stockholders

$

142,101

$

8,263

$

152,858

$

(4,670

)

Net income (loss) per share attributable to common stockholders:

Basic

$

1.71

$

0.10

$

1.87

$

(0.06

)

Diluted

$

1.60

$

0.10

$

1.75

$

(0.06

)

Weighted-average shares used to compute net income (loss) per share

attributable to common stockholders:

Basic

83,264

78,851

81,602

77,186

Diluted

89,064

84,364

87,170

77,186

(1) Includes stock-based compensation expense as follows:

Three Months Ended December 31,

Year Ended December 31,

2017

2016

2017

2016

Cost of revenue

$

1,079

$

874

$

4,010

$

2,446

Sales and marketing

6,666

6,722

28,100

27,098

Product development

12,851

10,595

47,280

36,323

General and administrative

4,811

5,673

21,025

20,394

Total stock-based compensation

$

25,407

$

23,864

$

100,415

$

86,261

Yelp Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Year Ended

December 31,

2017

2016

Operating activities

Net income (loss)

$

152,858

$

(4,670

)

Adjustments to reconcile net income (loss) to net cash provided by
operating activities:

Depreciation and amortization

41,198

35,346

Provision for doubtful accounts and sales returns

18,414

17,261

Stock-based compensation

100,415

86,261

Recording of valuation allowance

-

1,351

Gain on disposal of a business unit

(164,779

)

-

Other adjustments

(19

)

1,625

Changes in operating assets and liabilities:

Accounts receivable

(32,112

)

(31,624

)

Prepaid expenses and other assets

(1,362

)

5,687

Accounts payable, accrued expenses and other liabilities

52,882

15,278

Deferred revenue

152

385

Net cash provided by operating activities

167,647

126,900

Investing activities

Purchases of marketable securities

(354,895

)

(274,965

)

Maturities of marketable securities

264,000

265,500

Purchase of cost-method investment

-

(8,000

)

Sale of a business, net of cash sold

252,663

-

Acquisitions, net of cash received

(50,544

)

-

Purchases of property, equipment and software

(15,598

)

(22,994

)

Capitalized website and software development costs

(14,647

)

(14,191

)

Other investing activities

(1,080

)

(922

)

Net cash provided by (used in) investing activities

79,899

(55,572

)

Financing activities

Proceeds from issuance of common stock for employee stock-based plans

40,917

29,522

Taxes paid related to net share settlement of equity awards

(1,199

)

-

Repurchases of common stock

(12,556

)

-

Net cash provided by financing activities

27,162

29,522

Effect of exchange rate changes on cash and cash equivalents

941

(262

)

Change in cash and cash equivalents

275,649

100,588

Cash and cash equivalents - Beginning of period

272,201

171,613

Cash and cash equivalents - End of period

$

547,850

$

272,201

Yelp Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share data)

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

2017

2016

2017

2016

EBITDA and adjusted EBITDA:

GAAP net income (loss)

$

142,101

$

8,263

$

152,858

$

(4,670

)

Provision for income taxes

31,074

1,000

31,491

1,385

Other income, net

(1,897

)

(742

)

(4,864

)

(1,694

)

Depreciation and amortization

9,729

9,434

41,198

35,346

EBITDA

$

181,007

$

17,955

$

220,683

$

30,367

Stock-based compensation

25,407

23,864

100,415

86,261

Gain on disposal of a business unit

(164,779

)

-

(164,779

)

-

Restructuring and integration costs

1

3,455

288

3,455

Adjusted EBITDA

$

41,636

$

45,274

$

156,607

$

120,083

Net revenue

$

218,246

$

194,796

$

846,813

$

713,069

Adjusted EBITDA margin

19

%

23

%

18

%

17

%

Non-GAAP net income and income per share:

GAAP net income (loss)

$

142,101

$

8,263

$

152,858

$

(4,670

)

Stock-based compensation

25,407

23,864

100,415

86,261

Amortization of intangible assets

920

1,657

6,639

6,805

Restructuring and integration costs

1

3,455

288

3,455

Gain on disposal of a business unit

(164,779

)

-

(164,779

)

-

Tax adjustments (1)

13,199

(14,688

)

(15,255

)

(32,411

)

Non-GAAP net income

$

16,849

$

22,551

$

80,166

$

59,440

GAAP diluted shares

89,064

84,364

87,170

81,201

Non-GAAP net income per share

$

0.19

$

0.27

$

0.92

$

0.73

(1) Includes tax effects of stock-based compensation, amortization
of intangibles, restructuring and integration costs, gain on
disposal of a business unit, and the valuation allowance.

Revenue Impact of Corporate Development Activities
in 2017

During 2017, Yelp acquired two businesses, Nowait and Turnstyle
Analytics, in February and April, respectively, and sold Eat24 in
October. Because these corporate development activities impact the year
to year comparability of Yelp’s reported revenues, we are providing the
supplemental disclosure below, which presents the revenue contributions
of those businesses for each period of 2017.

Revenue from Nowait and Turnstyle is classified within the Other
services revenue line in the company’s SEC filings. Revenue from Eat24,
prior to the sale on October 10, 2017, was classified within
Transactions revenue in the company’s SEC filings.

Yelp Inc.

Fourth Quarter and Full Year Net Revenue Adjusted for Eat24,
Nowait and Turnstyle